GST rate on domestic MRO services for the aviation industry reduced to 5%

The Goods and Services Tax (GST) has been slashed from 18% to 5% on domestic maintenance, repair and overhaul (MRO) services for the aviation sector, the government announced on March 14.

The industry players had long been demanding the government to reduce the GST rate on aircraft MRO services. The reduction in tax rate is expected to accelerate the pace of setting up MRO services in India.

The expansion of the MRO sector is expected to assist in employment creation as the industry is labour-intensive. Like other industries such as information technology, where India has become the back-office of the world, certain tweaks in taxation could see aircraft fly to India for MRO visits, experts have claimed.

GST rate on domestic MRO services for the aviation industry reduced to 5% from 18%

Civil Aviation Minister Jyotiradiya Scindia, while speaking on India’s new policy for aircraft MRO services in September 2021, said the ministry plans to implement an allotment process for MROs via open tender and that it will provide allotment for 30 years to provide a stable ecosystem for investors.

The aviation ministry is trying to attract private investment for MRO at 8 airports, Scindia had noted.

ALSO READ - 8 airports identified by AAI for promoting Aircraft Maintenance, Repair and Overhaul activities

The Ministry of Civil Aviation, while announcing the reduction in the GST rate on MRO services today, also noted that the "issue of reduction of Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) has been taken up with the states and the UTs.

11 States/UTs have reduced the VAT on ATF to below 5%

"The following 11 States/UTs have reduced the VAT on ATF to below 5%: Andaman & Nicobar Islands, Dadar & Nagar Haveli and Daman & Diu, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir,  Ladakh, Madhya Pradesh, Tripura, Uttar Pradesh and Uttarakhand, the statement added.

In the written reply in Lok Sabha, Minister of State for Civil Aviation General (Retd) V K Singh said that the average number of passengers carried in the pre-COVID financial year (2019-20) was around 4 lakh per day. On 6th March 2022, domestic airlines in India carried around 3.7 lakh passengers.

The minister also noted that the Government of India has accorded 'in-principle' approval for setting up 21 greenfield airports across the country. So far, eight greenfield airports namely, Sindhudurg and Shirdi in Maharashtra, Durgapur in West Bengal, Pakyong in Sikkim, Kannur in Kerala, Orvakal in Andhra Pradesh, Kalaburagi in Karnataka and Kushinagar in Uttar Pradesh have been operationalised.

A conducive aircraft leasing and financing environment has been enabled

The minister also informed that a conducive aircraft leasing and financing environment has been enabled and improvement in air navigation infrastructure at Indian airports is being carried out.

The government has taken several measures to meet the increasing demand in the aviation sector. They include the Airports Authority of India (AAI) developing both new and existing airports over the next five years, with a projected capital outlay of INR 25,000 crore.

The development work will include constructing new terminals, expanding and modifying existing terminals, expanding and/or strengthening existing runways, aprons, Airport Navigation Services (ANS) infrastructure, technical blocks, control towers etc.

The government has also enabled a conducive aircraft leasing and financing environment.

For the airports at Delhi, Hyderabad, and Bangalore, public-private partnerships (PPP) are undertaking expansion projects worth INR 30,000 crore by 2025. A further INR 36,000 crore has also been planned to develop new greenfield airports.

Further, under the Regional Connectivity Scheme (RCS), 403 routes that connect 65 airports have been operationalised as of January 31, 2022. The government has also enabled a conducive aircraft leasing and financing environment.

Private airlines are choosing not to use aerobridges for boarding and deboarding an aircraft to save money and therefore, aged people are bearing the brunt as they have to use stairs, a Parliamentary committee stated on Monday, March 14.

"The Committee deplores this apathetic and unreasonable attitude of the private airlines," its report said, adding that such carriers should be penalised by the Ministry of Civil Aviation.

Aerobridge is a moveable tunnel that is extended from the airport building to the aircraft for boarding or deboarding passengers. Airlines have to pay a certain charge to the airport for using aerobridge facilities.

Private airlines in India are choosing not to use aerobridges for boarding to save money

A report of the Parliamentary Committee on Transport, Tourism and Culture were tabled in Rajya Sabha on Monday, March 14 wherein it said that despite having aerobridges in some of the airports, the airlines are not using them for boarding and deboarding the passengers and are instead using staircases.

"Despite charging passengers, aerobridge facilities are not being used by private airlines to reduce operational cost," it mentioned. Due to this, passengers especially the aged ones have to bear the brunt and climb the stairs of the parking stand to board an aircraft, it noted.

"The committee deplores this apathetic and unreasonable attitude of the private airlines and strongly recommends that its circular on the aforesaid subject may be strictly enforced," it mentioned.

Airlines have to pay a certain charge to the airport for using aerobridge facilities.

The Ministry of Civil Aviation had in 2018 issued a circular to all Indian airport operators stating that if an aerobridge is available for boarding and deboarding passengers, it must be used for their convenience.

The Committee recommended that the ministry should conduct regular surprise checks to ensure compliance with their circular and "in case there is a default, the concerned private airlines should be penalised".

Stating that different airlines were charging varied fares for the same distance and duration, the panel asked the Union government to ensure that the passengers are “not fleeced in the garb of commercialisation”.

This image is for representative purposes only.

It also described the airlines’ decision to charge extra money for selecting seats as “arbitrary and unjustifiable”.

The committee agreed that the civil aviation sector grows in an open market and private players should be given a free hand. However, it said that the Aircraft Rules, 1937, specifically mentions that the fares should be reasonable and should maintain reasonable profit.

“In the above context, the committee feels that the reply of the ministry stating that air travel is purely a contractual matter between the airline and the passenger, is not at all justified,” it said. “The committee believes that a balance also must be maintained between commercial interests of the airlines and the interests of the passengers.”

SpiceJet on Monday, March 14 said it will launch 60 new domestic flights this summer. The summer schedule starts on March 27 and ends on October 29.

In a statement, the airline said it will launch eight industry-first flights, which will operate on the Gorakhpur-Kanpur, Gorakhpur Varanasi, Jaipur-Dharamshala and Tirupati-Shirdi sectors, in the summer schedule. The airline will be deploying its Boeing 737 and Q400 aircraft on these routes. 

SpiceJet to add 60 new domestic flights this summer

SpiceJet has also announced a host of new flights, strengthening its domestic network. Some of the routes include Kolkata-Kushinagar-Kolkata, Guwahati-Durgapur-Guwahati, Varanasi-Jaipur-Varanasi, Hyderabad-Jabalpur-Hyderabad, Bengaluru-Thiruvananthapuram–Bengaluru, Chennai-Bagdogra-Chennai, Tirupati-Pune-Tirupati amongst a host of other flights.

"The airline has added 60 new domestic flights to its schedule, including seven UDAN flights, eight industry-first flights, new connections and additional frequencies," it said.

“We are excited to launch new flights and further strengthen our domestic network. We believe the time is ripe to expand as travel demand is picking up and the aviation sector is ready to embrace new opportunities to make a stronger comeback. We hope our new flights, including those under UDAN, in the upcoming Summer Schedule will positively contribute in meeting the robust travel demand and give the sector the impetus to reach newer heights.Shilpa Bhatia, Chief Commercial Officer, SpiceJet

Under the UDAN scheme, financial incentives from the Centre, state governments and airport operators are extended to selected airlines to encourage operations from unserved and underserved airports and keep airfares affordable.

ALSO READ - Indian carriers to boost weekly domestic flights by 10.1% for summer 2022

Indian carriers have increased their domestic services by 10.1% to 25,309 weekly flights in the upcoming summer schedule as compared to 22,980 last season, aviation regulator DGCA had said on March 11.

Only 87 of the approximately 9,000 pilots working with Indian carriers are from foreign countries, Minister of State for Civil Aviation V K Singh said on Monday, March 14.

A total of 404 foreign pilots were working in India as of June 10, 2019, according to government data.

“There is no shortage of pilots in the country. However, there is a shortage of commanders on certain types of aircraft and the same is being managed by utilising foreign pilots by issuing Foreign Aircrew Temporary Authorization(FATA),” Singh said on Monday, March 14 in his written reply to a question in Rajya Sabha.

Only 87 of the approximately 9,000 pilots working with Indian carriers are from foreign countries, Minister of State for Civil Aviation V K Singh.

Currently, there are 87 FATA holders in India and there are around 9,000 pilots employed with various airline operators in India, the minister stated.

Singh said 2,368 pilots were recruited in the country in 2019, 400 were recruited in 2020 and 296 were recruited in 2021. 

Recently Union Minister for Civil Aviation, Jyotiraditya Scindia said “At present, we need 9,500 pilots…over 40% of pilots go abroad for training.…again there is forex outgo. The training cost of a pilot is around INR 1.5 – INR 2 Crore We’ve to move flying/pilot training here.”

Singh said 2,368 pilots were recruited in the country in 2019, 400 were recruited in 2020 and 296 were recruited in 2021.

ALSO READ - We need to move Pilot training to India – Jyotiraditya Scindia

Hoping to make India a global flying training hub, the Ministry of Civil Aviation (MoCA) has announced setting up eight new academies across five airports — Belagavi and Kalaburagi in Karnataka, Jalgaon in Maharashtra, Khajuraho in Madhya Pradesh, and Lilabari in Assam in July 2020.

India requires an estimated 1,000 pilots annually to meet its traffic growth, as the Covid-19 pandemic has disrupted air travel and reduced manpower requirement. Indian pilot training institutes face several challenges, such as sub-optimal fleet size, high rent, old fleet, a lack of an adequate number of trainers, weather-related issues, etc.

Air India has 2,657 cases pending against it in Indian and international courts on matters related to employee service, customer complaints and commercial issues, Minister of State for Civil Aviation V K Singh said on Monday, March 14.

Since its disinvestment in 2021, Air India has been under the control of the Tata Group. "The total number of cases pending in Indian courts and international courts against Air India is 2,657,” Singh said in his reply to a question in Rajya Sabha.

2,657 open cases against Air India in Indian and international courts

These cases related to issues such as employee service matters, consumer complaints, commercial matters, he said. "These cases are against Air India as a legal entity and will remain with Air India,” Singh said. The minister said the Centre will not deal with the cases against Air India.

N Chandrasekaran appointed as Air India chairman

N Chandrasekaran, the chairman of Tata Sons, has been appointed as the chairman of Air India. The appointment was cleared at a board meeting held by Air India on Monday, March 14.

ALSO READ - N Chandrasekaran to continue with his review of Air India

Tata Sons Chairman, N Chandrasekaran appointed as Air India chairman

General Insurance Corporation former CMD Alice GeeVarghese Vaidyan will be inducted on the airline board as an independent director.

Air India founder J R D Tata remained the airline’s chief for decades after its nationalisation. He was chairman till February 1978 when the Morarji Desai government moved him from the post.

Tata Group had won the bid to acquire the national carrier along with Air India Express and a 50% stake in AISATS in October 2021. The Tata Group officially took over the management of the national airlines in January.

Tata Group officially took over the management of the national airlines in January.

ALSO READ - Day 1 of Tata’s Air India – What do we know so far?

Meanwhile, Air India is on the hunt for a new CEO to replace former Turkish Airlines CEO Ilker Ayci, who resigned before taking charge officially. Ilker Ayci was supposed to take responsibilities as the CEO and Managing Director (MD) of Air India on or before April 1, 2022.

ALSO READ - Amid the security row, Ilker Ayci declines Tata Sons’ offer to be the new CEO of Air India

The IP-based Automatic Message Switching System (AMSS) has been commissioned at Chennai airport. Nearly 120 hours before the departure of an international flight, a flight plan is prepared, sent to the origin, destination and airport en route.

From aeronautical to meteorological information, several crucial operational messages are shared among several departments to transport a passenger safely. This new software does all of this seamlessly.

The AMSS will help airport management staff and ATC officials better coordinate with airlines and other airports. The system is also good for the environment as it is entirely paperless. Additionally, pilots being able to plan their flight better will result in significant fuel savings and reduce the chances of delays.

Chennai airport gets IP-based navigation services system

V. Muruganandham, General Manager, Communication and Navigation Systems, Airports Authority of India (AAI), said they had upgraded the system from the old technology to IP-based AMSS because the old system had some inherent limitations and was becoming obsolete.

Earlier, aircraft operators had to physically go to the air-traffic-services block at the airport to get the brief of their flights. Now, using the new system they can do this remotely, Muruganandham added. M Suresh, board member of the Airports Authority of India (AAI) congratulated the team of experts who developed the system.

“A team of experts from Chennai and Kolkata developed this system at a cost of INR 12 lakh. It has been designed with global standards, keeping in mind the specifications required for India. This AMSS is available at other major airports in the country, including Mumbai, Kolkata, Delhi, Thiruvananthapuram and Mangaluru.”V. Muruganandham, General Manager, Communication and Navigation Systems, Airports Authority of India (AAI)

AAI officials said before a flight’s departure, the airline had to file a flight plan fed into this system from the departure destination and through a routine directory. It reaches all the airports en route in a standard format designed by International Civil Aviation Organisation.

“Once this plan is done, AMSS sends out this information to the air traffic management automation system, departure clearance system, Airport Command and Control (AOCC) which in turn goes into the display boards for passengers in the terminals,” an official said.

AMSS will help airport management staff and ATC officials better coordinate with airlines and other airports.

This was like a base system for all major airports in the world which helped them stay interconnected. “If I’m filing a flight plan from Chennai to New York, I can just send it via my system and based on routing directories, it will reach New York within seconds,” the official said.

Not just flight plans, the system will have information about navigational facilities such as Instrument Landing System and other systems that guide the aircraft to move in the air.

“Such installations are present across the world and in case some of these facilities are not working, then it will affect the flight and the pilot won’t get navigational information to fly. But this system will provide the pilot with such details on which systems are not working in an airport,” the official said.

Information about the weather conditions from the Meteorological Department is fed into the system round the clock.